Inside the Star

Pension plans rally to defend unwed spouses

A court’s decision to award pension assets to a man’s estranged widow and daughters – instead of his common law spouse—could have grave consequences, pension plans for more than 2 million Ontario members are warning.

Nortell retirees rally at Queens Park in 2009 for full pension benefits. Lawers warn the court of appeal ruling could increase costs for pension plans such as theirs and force a further reduction of payments to pensioners and survivors.
(Vince Talotta/Toronto Star)

Published on Thu Dec 20 2012

A court’s decision to award pension assets to a man’s estranged widow and daughters – instead of his common law spouse—could have grave consequences, pension plans for more than 2 million Ontario members are warning.

Executives representing several major pension plans, and an association for most other pension plans, predict there will be many costly lawsuits, a loss of pension assets, and a need to halt pension payments to some widows, widowers and former spouses.

On Halloween Day the Court of Appeal for Ontario overturned an earlier award of pension assets to Jennifer Quinn, who had lived for eight years with Windsor executive Ronald Carrigan, until he died suddenly in 2008.

“This is clearly something that has got to go higher,” her lawyer, Raymond Colautti, told the Toronto Star after he served notice he would ask the Supreme Court of Canada to review the ruling.

Carrigan had moved away from his wife years before moving in with Quinn, a co-worker. But he later named his wife and their two daughters as beneficiaries of his pension assets, worth $1.5 million when he died.

By respecting Carrigan’s wish, the Court of Appeal justices effectively overturned 25 years of accepted practice, which had always favoured the “spouse in the house,” Colautti and representatives of major pension plans argue.

Judge Mary Jo Nolan of the Ontario Superior Court of Justice had ruled last year that Carrigan’s wife should have divorced him to claim a fair share of his pension assets.

Justice Harry LaForme of the Ontario Court of Appeal agreed, but Justices Russell Juriansz and Gloria Epstein ruled Quinn was not entitled to the money, offering different interpretations of the law.

James Leech, president of the Ontario Teachers’ Pension Plan Board, wrote letter of support to Colautti that was also signed by executives from five other public sector pension plans.

“This (ruling) has very serious implications for pension plans, their members, and the large number of common law spouses who have received payments over the years…and whose entitlement to these payments may now be questioned,” he wrote.

He warns that the court’s ruling might not only take money away from unwed spouses of plan members who die before retiring. It could, in some circumstances, take survivor pensions away from both the common law spouse and the estranged wife or husband of someone who died after starting to collect a pension.

Al Kiel, a managing partner with benefits consultants Morneau Sheppell, predicts the ruling could increase costs for pension plans such as those of the bankrupt Nortel Networks Corp., and force a further reduction of payments to pensioners and survivors.

Carrigan was a shareholder and vice-president at wholesaler Electrozad Supply Co. Ltd. He had earned as much as $1 million some years, but owed $500,000 when he died, court rulings reveal.

He had an unusual relationship with his wife. They remained co-owners of both the family home and the apartment he shared with Quinn in nearby LaSalle. He provided her an income, had her cut his hair each month, and joined her for Christmas dinner. After his death, Quinn continued to live in the Carrigans’ apartment, as they had both promised she could.

“What the majority (of the Court of Appeal) has done is pick a different definition of spouse than appears in the introduction to the legislation, and that does not make any sense to me,” Colautti said in an earlier interview.

“Unfortunately, we don’t have a government in Ontario that can deal with the issue any time soon, if it is the case that the majority of the Court got the policy underpinnings all wrong,” he said.

A spokesperson for the Ministry of Finance said officials are studying the issues raised by the ruling, but are not ready to comment. The Legislature is not expected to return to session until after the Liberal leadership race.

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